Casino Accounting and Financial Management: Second Edition

Preface to 2nd Edition

Preface to the Second Edition The second edition of Casino Accounting and Financial Management represents both an updating and an expansion of the original text published first in 1988. In the intervening years, the casino industry has experienced both unprecedented growth and change. The industry has spread geographically—from what was a commercial industry spanning just two states—to an industry which is nationwide in the United States, with significant international gaming activity as well. The industry has evolved to include traditional commercial interests as well as including state governments and Native American tribal casino operations. Another major change in the industry involves the additional forms of casino gaming which have occurred since the publication of the first edition. The industry now comprises riverboats, floating casinos, racinos (racetracks with a casino-type operation), and governmentally operated video lottery terminals which closely resemble traditional slot machines. The most significant change, however, has been the growing dominance of slot machines as the major revenue generating sources in most casinos, regardless of their type, ownership, or geographic location. Coincident with the growth of the number of slot machines and their revenue dominance has been the continued evolution of various slot machine games. This electronic revolution has changed the types of slot machines, the way they operate, and the way they are accounted for and controlled. The spread of legalized gaming has also led to increased regulatory oversight . This oversight is exercised by states, by tribal gaming authorities, and by the casino operators themselves. A major addition to the text includes discussions of the role of currency transaction reporting and increasing information reporting to various agencies. In a departure from the earlier edition of the book, many of the statistical tables were removed, and only where the data tells an important story about the nature and the structure of the industry were they still included. There had been some concern that the tables used in the first edition were very quickly out-of-date. Of course, in any industry, particularly one as dynamic as the casino industry, changes occur very quickly, and as much as possible I have tried to keep the examples general and the data relevant and up-to-date. In assessing the impact of the industry changes on the detail organization and content of the book, the following major points seem to stand out. The book has been enlarged from thirteen to fifteen chapters. Also included for the first time is a gaming glossary to help readers understand the operating environment of a casino. Chapters 1 and 2 have been substantially enlarged and updated to reflect the changes in the industry outlined above. The spread of gaming to other state jurisdictions has resulted in a much broader discussion of the gaming regulations, rules, and practices in states other than Nevada and New Jersey. Chapter 3 has been updated and rewritten to clarify the role of gross revenue taxation in casino operations. It was expanded to include discussion of the taxation models used in other states. In the absence of revenue taxation in tribal gaming, there is little need for the discussion of taxation in the tribal environment. Chapters 4 through 9 have been extensively changed. Although the procedures for the basic accounting and finance transactions have not changed significantly since the first edition, there have been many evolutional steps involving slot machines in particular. The expansion of slot machines and gaming devices has resulted in the old chapter on slot machine accounting being expanded into two chapters. Chapter 5 describes the nature, type, and general operation of slot machines and other gaming devices. Chapter 6 discusses the accounting for slot machine transactions, and covers the new forms of play including ticket-in–ticket-out technology, as well as the accounting and control over bill acceptors or bill validators. The control over and use of electronic and computerized control procedures has also been expanded. The chapter on keno, bingo, and poker has been split into two chapters, and the increasing importance of poker gaming is discussed in the new chapter 9. The chapters on central cashiering and casino credit have been modestly updated to reflect current practice. Chapter 12 now encompasses casino accounting, auditing, and financial reporting, which has continued to evolve over the years. The material also incorporates the latest changes proposed by the American Institute of Certi- fied Public Accountants for changes and alterations to the Gaming Industry Audit Guide. The chapters on income taxation...